10/22/2021
There are rules for retirement planning:
1. Begin saving for retirement today, regardless of your current age.
2. Assume you will live a long life and will suffer multiple health problems.
3. Do not be fooled into thinking that Social Security and your pension will be enough to live on.
4. Seek professional advice.
5. Look at your assets from two angles: their worth to you and their worth to others.
The most common problem relating to retirement planning has to do with simple procrastination. Everyone, when asked, states that they DO plan to save for their retirement, but few start as early as they should.
The most common age to begin a retirement savings is forty years old. For every year that procrastination occurs, your retirement options are drastically reduced. Not only do late starters lose valuable time, but since inflation erodes dollars, anyway, it simply compounds the problem. That is not to say that it is ever too late to start. It is better to start at any age than not at all.
When the ethical investor considers retirement, there are several questions to be considered. One of the least considered, yet most important questions, has to do with long-term medical care arrangements. At age 35 or 40 it might be very difficult to image oneself needing a nursing home. By age 65, it seems much more likely.
It is probably not necessary to actually consider nursing home options at the age of 35 or 40. If investors are simply putting money away regularly for their retirement years that is probably sufficient at that age. Before the age 65, however, specific choices must be considered. Why before the age of 65? Because it is likely that the purchase of a nursing home policy will be a wise choice. When this type of insurance policy is purchased before the age of 65, the cost is much lower. Long-term care insurance is less expensive the earlier it is purchased. While rates can go up, the rate will always be based upon the age of purchase. Therefore, it is better to buy at age 60 than age 65; it is better still if purchased at age 55 versus age 60. Even if the policy benefits are not needed for ten to twenty many years it is still a better buy at earlier ages.
Insurance agents commonly hear retired people state: "I'm never going to go into a nursing home. My children will take care of me."
Since we are looking at this from an ethical standpoint, however, we know that this is a selfish statement. No matter how much the children love the parent, there are few situations where a child can care for their elderly, and often sick, parent in their own home or their parent's home. Taking care of an elderly person is not a simple task. It involves health problems, lack of mobility, sometimes a diminished mind and multiple other possibilities. In many cases, the children do not have access to a home that is set up for wheelchairs; bathrooms may not accommodate the needs; and bedrooms may be located upstairs. How far would you expect your children to go to satisfy your desire to avoid institutionalization?
Prior to the age of 65, each ethical person must address these questions. There may be no easy answers, but at least from a financial standpoint, there are some solutions. There are now some excellent long-term care insurance policies on the market. Each person must address this possible need. For the ethical investor, there is simply no way to avoid it and remain ethical.
There will be other health care needs as well. Prior to retirement, each of these must be addressed so that those you love will not be burdened either financially or physically. Ensuring that you do not have to face a serious decline in your life style is a primary goal of retirement planning. If health care needs, such as a nursing home confinement, erodes everything you've saved, then you will have failed to secure that goal.
Most ethical investors do tend to be thoughtful planners by nature. If these possibilities are brought forth, they do tend to take them seriously. As an insurance agent, it is your job to bring these needs to the surface.
